No AFA for China's Export Buyer's Credit Program Without Lengthy Explanation, CIT Says
Judge Timothy Reif issued lengthy remand instructions Oct. 12 to the Commerce Department over its application of adverse facts available over China's Export Buyer's Credit Program in a countervailing duty review, citing the scene in the movie Philadelphia in which Denzel Washington's character asks Tom Hanks' character to explain something to him as he would to a two-year old.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
The case comes from the 2017 administrative review of the countervailing duty order on passenger vehicle and light truck tires from China, where Cooper (Kunshan) Tire Co. and Shandong Longyue Rubber Co. served as the two mandatory respondents. As it had done many other times, Commerce applied AFA to the respondents for allegedly benefiting from the EBCP. In particular, Commerce found that the Chinese government failed to provide certain information on how the program works so that the agency could verify that the respondents didn't use the program.
Commerce wanted to know about a supposed loan threshold the Chinese government put in place in 2013 and the precise banks that participate in the program. Determining that the Chinese government's answers, to the extent there were any, were unsatisfactory, Commerce then applied AFA to the respondents for this lack of cooperation from the Chinese government. Having previously likened this practice to the film Groundhog Day, Reif attempted to break this repeated practice by Commerce, which has not appealed the issue, by issuing lengthy remand instructions in a similar case (see 2105270080).
However, in that instance, Commerce actually stuck with its application of AFA relating to the EBCP rather than simply spurning the label as it has done in most other cases (see 2109090069). In that case, the agency argued that the information requested of the Chinese government was essential for the agency to know in order for it to verify that the respondents' U.S. customers did not benefit from the program.
While Reif's remand instructions in that case were expansive, Reif wants even more information from Commerce this time around, requesting that the agency give a reason why one of the respondents questionnaire responses, for instance, are unverifiable by describing step-by-step Commerce's methodology for verifying non-use.
The court's precise remand instructions are as follows: "(1) explain the reason that the information withheld by the [Government of China] about the threshold requirement and the 2013 revisions was necessary to verify non-use by describing how the missing information prevented Commerce from taking the steps that it considered necessary to verify non-use; (2)(a) explain the reason that the questionnaire statements by Cooper Tire of non-use by its customers are 'unverifiable' by describing step-by-step Commerce’s methodology for verifying non-use; (b) describe the extent to which the record would enable Commerce to understand the precise role that the mandatory respondents would play in permitting customers to participate in the EBCP; (c) describe the information that Commerce would need from the mandatory respondents and/or the customers to determine whether either the mandatory respondents or their customers used the EBCP; (3) explain the sources that Commerce would need to look at to complete the process of verification, including any correspondence or communications of any nature (e.g., emails, letters, faxes, telephone calls, text messages) between the mandatory respondents or their customers and the GOC, the China Export-Import Bank and partner/correspondent banks; (4) explain whether it would be feasible — and, if not, why not — for Commerce to solicit and obtain the withheld information about the threshold requirement from the mandatory respondents or their customers; (5) if Commerce were to consider that obtaining and conducting a review of the sources of information identified in '(3)', above, were unduly burdensome, explain with particularity the reasons for this conclusion; and (6) explain the extent to which Commerce would be able to rely on information from mandatory respondents by explaining how, if at all, such information would be relevant and reliable for Commerce to establish non-use.
"Accordingly, the court remands the Final Determination to Commerce."
(Cooper (Kunshan) Tire Co., Ltd., et al. v. United States, Slip Op. 21-141, CIT Consol. #20-00113, dated 10/12/21, Judge Timothy Reif. Attorneys: Gregory Dorris of Troutman Pepper for plaintiff Cooper; Ashley Akers for defendant U.S. government)